WASHINGTON – A federal program that provides loans to businesses to help them stay afloat during the coronavirus pandemic is undergoing some changes to allow more money to be directed at small businesses that need it most.
President Joe Biden will announce several revisions on Monday to the Paycheck Protection Program, which Congress approved last year as part of a nearly $2 trillion COVID-relief bill.
While the program delivered urgent relief to many businesses across the country, the initial round of loans issued under the program last year left out too many minority-owned and mom-and-pop businesses while larger companies that are better connected got the funds quickly, administration officials said Sunday.
To address those concerns, Biden will announce that only businesses with fewer than 20 employees will be allowed to apply for the program over a 14-day period that begins Wednesday. Some 98% of small businesses have fewer than 20 employees, and the 14-day application period will allow lenders to focus on serving them, administration officials said.
Report: Thousands of PPP loans went to small businesses that should not have received them
The administration also will revise the program’s loan calculation formula so that independent contractors, self-employed individuals and sole proprietors will have a better chance of getting the loans. Under the current formula, many of these businesses, which include home repair contractors, beauticians and small independent retailers, were excluded from the program or approved for as little as $1.
In addition, Biden plans to eliminate provisions that bar small business owners from participating in the program if they have a prior felony conviction, or are currently delinquent or have defaulted on their federal student loans in the past seven years.
Another change will make it easier for small business owners who aren’t U.S. citizens but are legal residents of the country to access the loans by using their individual taxpayer identification numbers to apply for the program.
More than 5 million businesses got loans totaling $525 billion through the Paycheck Protection Program last year. Congress allocated $284 billion for another round of loans in December. So far, only $134 billion has been awarded to 1.8 million small businesses in the latest round.
The loans can be forgiven if a company spends at least 60% of the money on payroll expenses, such as wages, salaries, group health insurance, and a maximum of 40% on other qualifying expenses.
The program expires at the end of March.
Michael Collins covers the White House. Follow him on Twitter @mcollinsNEWS.
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